For now, the negatives outweigh the positives with regards to alternative digital currencies. The need for anonymous criminal cash transactions will always lead and supersede those of legitimate business commerce. The criminal element contains a constant element of desperation. Desperate people will always forgo legal boundaries if their need is great enough.
Bitcoin suffers from its ability to move vast amounts of cash. It is this capability that lures nefarious activity. If an alternate currency were to be offered that limited this capability then the considerable benefits of using digital currency could be employed. Bitcoin’s use as a means of exchange – in limited monetary transactions – is its biggest draw. Paying for coffee, dinner, movies, etc. via instant electronic transfer, anonymously, increases our personal information security, reduces identity theft and removes institutional banking from the money minutia of everyday living. It looks like the most deleterious use of BTC is its ability to move large quantities of cash. I would wager that 99% of users would never use BTC in this way. That they would use it as a means of daily, limit, economic exchange.
But how to limit Bitcoin’s or its successor’s huge money moving capability?
Bitcoin 2.0 cannot completely eliminate such capability. But like the mining of bitcoin, BTC 2.0 could make it increasingly arduous to transfer larger and larger quantities of BTC.
• Limit accounts/addresses/keys per IP.
• Limit transactions per account/address/key, 10 per day.
• Limit transaction sizes (10% of the 10 year moving average price of gold).
• Throttle transaction throughput by transaction size, the smaller the faster.
No doubt other ways to build in constraints can be thought of.
Reducing the laundering capability yet increase the utility of digital currencies is a worth endeavor. Money need not only be comprised of dollars and cents.